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1040 ez free Publication 3402 - Main Content Table of Contents What is a Limited Liability Company? Classification of an LLC LLCs Classified as Partnerships LLCs Classified as Disregarded Entities LLCs Classified as Corporations Subsequent Elections How To Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What is a Limited Liability Company? For purposes of this publication, a limited liability company (LLC) is a business entity organized in the United States under state law. 1040 ez free Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. 1040 ez free An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301. 1040 ez free 7701-3. 1040 ez free The information in this publication applies to LLCs in general, and different rules may apply to special situations, including banks, insurance companies, or nonprofit organizations that are LLCs or that own LLCs. 1040 ez free Check your state's requirements and the federal tax regulations for further information. 1040 ez free Classification of an LLC Default classification rules. 1040 ez free   An LLC with at least two members is classified as a partnership for federal income tax purposes. 1040 ez free An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes). 1040 ez free Also, an LLC's federal tax classification can subsequently change under certain default rules discussed later. 1040 ez free Elected classification. 1040 ez free   If an LLC does not choose to be classified under the above default classifications, it can elect to be classified as an association taxable as a corporation or as an S corporation. 1040 ez free After an LLC has determined its federal tax classification, it can later elect to change that classification. 1040 ez free For details, see Subsequent Elections, later. 1040 ez free LLCs Classified as Partnerships If an LLC has at least two members and is classified as a partnership, it generally must file Form 1065, U. 1040 ez free S. 1040 ez free Return of Partnership Income. 1040 ez free Generally, an LLC classified as a partnership is subject to the same filing and reporting requirements as partnerships. 1040 ez free For certain purposes, members of an LLC are treated as limited partners in a limited partnership. 1040 ez free For example, LLC members are treated as limited partners for purposes of material participation under the passive activity limitation rules (see Temporary Regulation section 1. 1040 ez free 469-5T(e)). 1040 ez free See the Instructions for Form 1065 for reporting rules that apply specifically to LLCs. 1040 ez free Member manager. 1040 ez free   Only a member manager of an LLC can sign the partnership tax return. 1040 ez free And only a member manager can represent the LLC as the tax matters partner under the consolidated audit proceedings in sections 6221 through 6234. 1040 ez free A member manager is any owner of an interest in the LLC who, alone or together with others, has the continuing authority to make the management decisions necessary to conduct the business for which the LLC was formed. 1040 ez free If there are no elected or designated member managers, each owner is treated as a member manager. 1040 ez free Change in default classification. 1040 ez free   If the number of members in an LLC classified as a partnership is reduced to only one member, it becomes an entity disregarded as separate from its owner under Regulations section 301. 1040 ez free 7701-3(f)(2). 1040 ez free However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a disregarded entity will not apply. 1040 ez free   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. 1040 ez free If a partnership that becomes a disregarded entity as a result of a decrease in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed under Subsequent Elections, later, apply. 1040 ez free Example 1. 1040 ez free Ethel and Francis are members of an LLC classified as a partnership for federal tax purposes. 1040 ez free Each holds an equal membership interest. 1040 ez free The LLC does not hold any unrealized receivables or substantially appreciated inventory. 1040 ez free Ethel sells her entire interest in the LLC to Francis for $10,000. 1040 ez free After the sale, the business is continued by the LLC, which is owned solely by Francis. 1040 ez free No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. 1040 ez free The partnership terminates when Francis buys Ethel's entire interest. 1040 ez free Ethel must treat the transaction as the sale of a partnership interest and must report gain or loss, if any, resulting from the sale of her partnership interest. 1040 ez free For purposes of determining the tax treatment of Francis, the partnership is deemed to make a liquidating distribution of all of its assets to Ethel and Francis, and after this distribution, Francis is treated as acquiring the assets deemed to have been distributed to Ethel in liquidation of Ethel's partnership interest. 1040 ez free Francis's basis in the assets attributable to Ethel's one-half interest in the partnership is $10,000, the purchase price for Ethel's partnership interest. 1040 ez free Upon the termination of the partnership, Francis is considered to receive a distribution of those assets attributable to Francis's former interest in the partnership. 1040 ez free Francis must recognize gain or loss, if any, on the deemed distribution of the assets to the extent required by Internal Revenue Code section 731(a). 1040 ez free See Partnership Distributions in Publication 541. 1040 ez free Example 2. 1040 ez free George and Henrietta are members of an LLC classified as a partnership for federal tax purposes. 1040 ez free Each holds an equal membership interest. 1040 ez free The LLC does not hold any unrealized receivables or substantially appreciated inventory. 1040 ez free George and Henrietta each sell their entire interests in the LLC to Ian, an unrelated person, in exchange for $10,000. 1040 ez free After the sale, the business is continued by the LLC, which is owned solely by Ian. 1040 ez free No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. 1040 ez free The partnership terminates when Ian purchases the entire interests of George and Henrietta in the LLC. 1040 ez free George and Henrietta must report gain or loss, if any, resulting from the sale of their partnership interests. 1040 ez free For purposes of classifying the acquisition by Ian, the partnership is deemed to make a liquidating distribution of its assets to George and Henrietta. 1040 ez free Immediately following this distribution, Ian is deemed to acquire, by purchase, all of the former partnership's assets. 1040 ez free   For more details on the preceding two examples, see Revenue Ruling 99-6, 1999-6 I. 1040 ez free R. 1040 ez free B. 1040 ez free 6. 1040 ez free You can find Revenue Ruling 99-6 at www. 1040 ez free irs. 1040 ez free gov/pub/irs-irbs/irb99-06. 1040 ez free pdf. 1040 ez free LLCs Classified as Disregarded Entities If an LLC has only one member and is classified as an entity disregarded as separate from its owner, its income, deductions, gains, losses, and credits are reported on the owner's income tax return. 1040 ez free For example, if the owner of the LLC is an individual, the LLC's income and expenses would be reported on the following schedules filed with the owner's Form 1040: Schedule C, Profit or Loss from Business (Sole Proprietorship); Schedule C-EZ, Net Profit From Business (Sole Proprietorship); Schedule E, Supplemental Income and Loss; or Schedule F, Profit or Loss From Farming. 1040 ez free Employment tax and certain excise taxes. 1040 ez free   A single-member LLC that is classified as a disregarded entity for income tax purposes is treated as a separate entity for purposes of employment tax and certain excise taxes. 1040 ez free For wages paid after January 1, 2009, the single-member LLC is required to use its name and employer identification number (EIN) for reporting and payment of employment taxes. 1040 ez free A single-member LLC is also required to use its name and EIN to register for excise tax activities on Form 637; pay and report excise taxes reported on Forms 720, 730, 2290, and 11-C; and claim any refunds, credits, and payments on Form 8849. 1040 ez free See the employment and excise tax returns for more information. 1040 ez free Self-employment tax rule for disregarded entity LLCs. 1040 ez free   An individual owner of a single-member LLC classified as a disregarded entity is not an employee of the LLC. 1040 ez free Instead, the owner is subject to tax on the net earnings from self-employment of the LLC which is treated in the same manner as a sole-proprietorship. 1040 ez free Example 3. 1040 ez free LLC is a disregarded entity owned by Irene. 1040 ez free LLC has three employees (Kent, Patricia, and Tex) and pays wages. 1040 ez free LLC is treated as an entity separate from its owner for purposes of employment taxes. 1040 ez free For the wages paid to Kent, Patricia, and Tex, LLC is liable for income tax withholding, Federal Insurance Contributions Act (FICA) taxes, and Federal Unemployment Tax Act (FUTA) taxes. 1040 ez free In addition, LLC must file under its name and EIN the applicable employment tax returns; make timely employment tax deposits; and file with the Social Security Administration and furnish to LLC's employees (Kent, Patricia, and Tex) Forms W-2, Wage and Tax Statement. 1040 ez free Irene is self-employed for purposes of the self-employment tax. 1040 ez free Thus, Irene is subject to self-employment tax on her net earnings from self-employment with respect to LLC's activities. 1040 ez free Irene is not an employee of LLC for purposes of employment taxes. 1040 ez free Because LLC is treated as a sole proprietorship of Irene for income tax purposes, Irene must report the income and expenses from LLC on her Schedule C. 1040 ez free Irene will figure the tax due on her net earnings from self-employment on Schedule SE. 1040 ez free Irene can also deduct one-half of her self-employment tax on line 27 of her Form 1040. 1040 ez free Taxpayer identification number. 1040 ez free   For all income tax purposes, a single-member LLC classified as a disregarded entity must use the owner's social security number (SSN) or EIN. 1040 ez free This includes all information returns and reporting related to income tax. 1040 ez free For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number and Certification, the LLC must provide the owner's SSN or EIN, not the LLC's EIN. 1040 ez free   However, most new single-member LLCs classified as a disregarded entity will need to obtain an EIN for the LLC. 1040 ez free An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed above (see Employment tax and certain excise taxes earlier). 1040 ez free See Form SS-4, Application for Employer Identification Number, for information on applying for an EIN. 1040 ez free Change in default classification. 1040 ez free   If a single-member LLC classified as a disregarded entity for income tax purposes acquires an additional member, it becomes a partnership under Regulations section 301. 1040 ez free 7701-3(f)(2). 1040 ez free However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a partnership will not apply. 1040 ez free   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. 1040 ez free If a disregarded entity that becomes a partnership as a result of an increase in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed in Subsequent Elections, later, apply. 1040 ez free Example 4. 1040 ez free Bart, who is not related to Alain, buys 50% of Alain's interest in an LLC that is a disregarded entity for $5,000. 1040 ez free Alain does not contribute any portion of the $5,000 to the LLC. 1040 ez free Alain and Bart continue to operate the business of the LLC as co-owners of the LLC. 1040 ez free The LLC is converted to a partnership when the new member, Bart, buys an interest in the disregarded entity from the owner, Alain. 1040 ez free Bart's buying a 50% interest in Alain's ownership interest in the LLC is treated as Bart's buying a 50% interest in each of the LLC's assets, which are treated as owned directly by Alain for federal income tax purposes. 1040 ez free Immediately thereafter, Alain and Bart are treated as contributing their respective interests in those assets to a partnership in exchange for ownership interests in the partnership. 1040 ez free Alain recognizes gain or loss from the deemed sale to Bart of the 50% interest in the assets. 1040 ez free Neither Alain nor Bart recognizes any gain or loss as a result of the deemed contribution of the assets to the partnership. 1040 ez free Example 5. 1040 ez free Charles, who is not related to Danielle, contributes $10,000 to an LLC owned by Danielle for a 50% ownership interest in the LLC. 1040 ez free The LLC uses all of the contributed cash in its business. 1040 ez free Charles and Danielle continue to operate the business of the LLC as co-owners of the LLC. 1040 ez free The LLC is converted from a disregarded entity to a partnership when Charles contributes cash to the LLC. 1040 ez free Charles's contribution is treated as a contribution to a partnership in exchange for an ownership interest in the partnership. 1040 ez free Danielle is treated as contributing all of the assets of the LLC to the partnership in exchange for a partnership interest. 1040 ez free Neither Charles nor Danielle recognizes gain or loss as a result of the conversion of the disregarded entity to a partnership. 1040 ez free   For more details on the preceding two examples, see Revenue Ruling 99-5, 1999-6 I. 1040 ez free R. 1040 ez free B. 1040 ez free 8. 1040 ez free You can find Revenue Ruling 99-5 at www. 1040 ez free irs. 1040 ez free gov/pub/irs-irbs/irb99-06. 1040 ez free pdf. 1040 ez free LLCs Classified as Corporations An LLC with either a single member or more than one member can elect to be classified as a corporation rather than be classified as a partnership or disregarded entity under the default rules discussed earlier. 1040 ez free File Form 8832, Entity Classification Election, to elect classification as a C corporation. 1040 ez free File Form 2553, Election by a Small Business Corporation, to elect classification as an S corporation. 1040 ez free LLCs electing classification as an S corporation are not required to file Form 8832 to elect classification as a corporation before filing Form 2553. 1040 ez free By filing Form 2553, an LLC is deemed to have elected classification as a corporation in addition to the S corporation classification. 1040 ez free If the LLC elects to be classified as a corporation by filing Form 8832, a copy of the LLC's Form 8832 must be attached to the federal income tax return of each direct and indirect owner of the LLC for the tax year of the owner that includes the date on which the election took effect. 1040 ez free Example 6. 1040 ez free Classification as a corporation without an S election. 1040 ez free Wanda and Sylvester are members of an LLC. 1040 ez free They agree that the LLC should be classified as a corporation but do not want to elect to have the LLC be treated as an S corporation. 1040 ez free The LLC must file Form 8832. 1040 ez free Example 7. 1040 ez free Classification as a corporation with an S election. 1040 ez free Evelyn and Carol are members of an LLC. 1040 ez free They agree that the LLC should be classified as an S corporation. 1040 ez free The LLC must file Form 2553 instead of Form 8832. 1040 ez free If the LLC is classified as a corporation, it must file a corporation income tax return. 1040 ez free If it is a C corporation, it is taxed on its taxable income and distributions to the members are includible in the members' gross income to the extent of the corporation's earnings and profits (double taxation). 1040 ez free If it is an S corporation, the corporation is generally not subject to any income tax and the income, deductions, gains, losses, and credits of the corporation “pass through” to the members. 1040 ez free Corporations generally file either: Form 1120, U. 1040 ez free S. 1040 ez free Corporation Income Tax Return; or Form 1120S, U. 1040 ez free S. 1040 ez free Income Tax Return for an S Corporation. 1040 ez free For more information on the income taxation of corporations and their shareholders, see Publication 542, Corporations. 1040 ez free For more information on the income taxation of S corporations and their shareholders, see the Instructions for Form 1120S, U. 1040 ez free S. 1040 ez free Income Tax Return for an S Corporation. 1040 ez free Subsequent Elections An LLC can elect to change its classification. 1040 ez free Generally, once an LLC has elected to change its classification, it cannot elect again to change it classification during the 60 months after the effective date of the election. 1040 ez free An election by a newly formed LLC that is effective on the date of formation is not considered a change for purposes of this limitation. 1040 ez free For more information and exceptions, see Regulations section 301. 1040 ez free 7701-3(c) and the Form 8832 instructions. 1040 ez free An election to change classification can have significant tax consequences based on the following transactions that are deemed to occur as a result of the election. 1040 ez free Partnership to corporation. 1040 ez free   An election to change classification from a partnership to a corporation will be treated as if the partnership contributed all of its assets and liabilities to the corporation in exchange for stock and the partnership then immediately liquidated by distributing the stock to its partners. 1040 ez free   For more information, see Partnership Distributions in Publication 541 and Property Exchanged for Stock in Publication 542. 1040 ez free Corporation to partnership. 1040 ez free   An election to change classification from a corporation to a partnership will be treated as if the corporation distributed all of its assets and liabilities to its shareholders in liquidation and the shareholders then immediately contributed all of the distributed assets and liabilities to a new partnership. 1040 ez free   For more information, see Contribution of Property in Publication 541 and Distributions to Shareholders in Publication 542. 1040 ez free Corporation to disregarded entity. 1040 ez free   An election to change classification from a corporation to a disregarded entity will be treated as if the corporation distributed all of its assets and liabilities to its single owner in liquidation. 1040 ez free   For more information, see Distributions to Shareholders in Publication 542. 1040 ez free Disregarded entity to corporation. 1040 ez free   An election to change classification from a disregarded entity to a corporation will be treated as if the owner of the disregarded entity contributed all of the assets and liabilities to the corporation in exchange for stock. 1040 ez free   For more information, see Property Exchanged for Stock in Publication 542. 1040 ez free How To Get More Information This section describes the help the IRS and other federal agencies offer to taxpayers who operate their own businesses. 1040 ez free Internal Revenue Service You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 1040 ez free By selecting the method that is best for you, you will have quick and easy access to tax help. 1040 ez free Contacting your Taxpayer Advocate. 1040 ez free   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. 1040 ez free   You can contact the TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if you are eligible for assistance. 1040 ez free You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service — Your Voice at the IRS. 1040 ez free You can file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf. 1040 ez free For more information, go to www. 1040 ez free irs. 1040 ez free gov/advocate. 1040 ez free Low Income Taxpayer Clinics (LITCs). 1040 ez free   LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies with the IRS for free or for a nominal charge. 1040 ez free The clinics also provide tax education and outreach for taxpayers with limited English proficiency or who speak English as a second language. 1040 ez free Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. 1040 ez free It is available at www. 1040 ez free irs. 1040 ez free gov or at your local IRS office. 1040 ez free Small business workshops. 1040 ez free   Small business workshops are designed to help the small business owner understand and fulfill their federal tax responsibilities. 1040 ez free Workshops are sponsored and presented by IRS partners who are federal tax specialists. 1040 ez free Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. 1040 ez free Although most are free, some workshops have fees associated with them. 1040 ez free Any fees charged for a workshop are paid to the sponsoring organization, not the IRS. 1040 ez free   For more information, visit www. 1040 ez free irs. 1040 ez free gov/businesses/small. 1040 ez free Subscribe to e-news for small businesses. 1040 ez free   Join the e-News for Small Businesses mailing list to receive updates, reminders, and other information useful to small business owners and self employed individuals. 1040 ez free Visit the website at www. 1040 ez free irs. 1040 ez free gov/businesses/small and click on “Subscribe to e-News. 1040 ez free ” Free tax services. 1040 ez free   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 1040 ez free It contains a list of free tax publications and describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. 1040 ez free   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. 1040 ez free Internet. 1040 ez free You can access the IRS website at www. 1040 ez free irs. 1040 ez free gov 24 hours a day, 7 days a week, to: E-file your return. 1040 ez free Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 1040 ez free Check the status of your refund. 1040 ez free Go to www. 1040 ez free irs. 1040 ez free gov and click on Where's My Refund. 1040 ez free Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 1040 ez free If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 1040 ez free Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040 ez free Download forms, instructions, and publications. 1040 ez free Order IRS products online. 1040 ez free Research your tax questions online. 1040 ez free Search publications online by topic or keyword. 1040 ez free View Internal Revenue Bulletins (IRBs) published in the last few years. 1040 ez free Figure your withholding allowances using the withholding calculator online at www. 1040 ez free irs. 1040 ez free gov/individuals. 1040 ez free Determine if Form 6251 must be filed using our Alternative Minimum Tax (AMT) Assistant. 1040 ez free Sign up to receive local and national tax news by email. 1040 ez free Get information on starting and operating a small business. 1040 ez free Phone. 1040 ez free Many services are available by phone. 1040 ez free Ordering forms, instructions, and publications. 1040 ez free Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. 1040 ez free You should receive your order within 10 days. 1040 ez free Asking tax questions. 1040 ez free Call the IRS with your tax questions at 1-800-829-1040. 1040 ez free Solving problems. 1040 ez free You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. 1040 ez free An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 1040 ez free Call your local Taxpayer Assistance Center for an appointment. 1040 ez free To find the number, go to www. 1040 ez free irs. 1040 ez free gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1040 ez free TTY/TDD equipment. 1040 ez free If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 1040 ez free TeleTax topics. 1040 ez free Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. 1040 ez free Refund information. 1040 ez free To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). 1040 ez free Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 1040 ez free If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 1040 ez free Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040 ez free Refunds are sent out weekly on Fridays. 1040 ez free If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. 1040 ez free Evaluating the quality of our telephone services. 1040 ez free To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 1040 ez free One method is for a second IRS representative to listen in on or record random telephone calls. 1040 ez free Another is to ask some callers to complete a short survey at the end of the call. 1040 ez free Walk-in. 1040 ez free Many products and services are available on a walk-in basis. 1040 ez free Products. 1040 ez free You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040 ez free Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. 1040 ez free Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 1040 ez free Services. 1040 ez free You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. 1040 ez free An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040 ez free If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. 1040 ez free No appointment is necessary—just walk in. 1040 ez free If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. 1040 ez free A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. 1040 ez free If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. 1040 ez free All other issues will be handled without an appointment. 1040 ez free To find the number of your local office, go to www. 1040 ez free irs. 1040 ez free gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1040 ez free Mail. 1040 ez free You can send your order for forms, instructions, and publications to the address below. 1040 ez free You should receive a response within 10 days after your request is received. 1040 ez free Internal Revenue Service1201 N. 1040 ez free Mitsubishi MotorwayBloomington, IL 61705–6613 DVD for tax products. 1040 ez free You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. 1040 ez free Prior-year forms, instructions, and publications. 1040 ez free Tax Map: an electronic research tool and finding aid. 1040 ez free Tax law frequently asked questions. 1040 ez free Tax Topics from the IRS telephone response system. 1040 ez free Internal Revenue Code—Title 26 of the U. 1040 ez free S. 1040 ez free Code. 1040 ez free Fill-in, print, and save features for most tax forms. 1040 ez free Internal Revenue Bulletins. 1040 ez free Toll-free and email technical support. 1040 ez free Two releases during the year. 1040 ez free – The first release will ship the beginning of January. 1040 ez free – The final release will ship the beginning of March. 1040 ez free Purchase the DVD from National Technical Information Service (NTIS) at www. 1040 ez free irs. 1040 ez free gov/cdorders for $30 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the DVD for $30 (plus a $6 handling fee). 1040 ez free Small Business Administration The Small Business Administration (SBA) offers training and educational programs, counseling services, financial programs, and contract assistance for small business owners. 1040 ez free The SBA also has publications and videos on a variety of business topics. 1040 ez free The following briefly describes assistance provided by the SBA. 1040 ez free Small Business Development Centers (SBDCs). 1040 ez free   SBDCs provide counseling, training, and technical services to current and prospective small business owners who cannot afford the services of a private consultant. 1040 ez free Help is available when beginning, improving, or expanding a small business. 1040 ez free Business Information Centers (BICs). 1040 ez free   BICs offer a small business reference library, management video tapes, and computer technology to help plan a business. 1040 ez free BICs also offer one-on-one assistance. 1040 ez free Individuals who are in business or are interested in starting a business can use BICs as often as they wish at no charge. 1040 ez free Service Corps of Retired Executives (SCORE). 1040 ez free   SCORE provides small business counseling and training to current and prospective small business owners. 1040 ez free SCORE is made up of current and former business people who offer their expertise and knowledge to help people start, manage, and expand a small business. 1040 ez free SCORE also offers a variety of small business workshops. 1040 ez free    Internet. 1040 ez free You can visit the SBA website at www. 1040 ez free sba. 1040 ez free gov. 1040 ez free While visiting the SBA website, you can find a variety of information of interest to small business owners. 1040 ez free    Phone. 1040 ez free Call the SBA Answer Desk at 1-800-UASK-SBA (1-800-827-5722) for general information about programs available to assist small business owners. 1040 ez free    Walk-in. 1040 ez free You can walk in to a Small Business Development Center or Business Information Center to request assistance with your small business. 1040 ez free To find the location nearest you, visit the SBA website or call the SBA Answer Desk. 1040 ez free Other Federal Agencies Other federal agencies also publish publications and pamphlets to assist small businesses. 1040 ez free Most of these are available from the Superintendent of Documents at the Government Printing Office. 1040 ez free You can get information and order these publications and pamphlets in several ways. 1040 ez free Internet. 1040 ez free You can visit the GPO website at www. 1040 ez free access. 1040 ez free gpo. 1040 ez free gov. 1040 ez free Mail. 1040 ez free Write to the GPO at the following address. 1040 ez free Superintendent of DocumentsU. 1040 ez free S. 1040 ez free Government Printing OfficeP. 1040 ez free O. 1040 ez free Box 979050St. 1040 ez free Louis, MO 63917-9000 Phone. 1040 ez free Call the GPO toll-free at 1-866-512-1800 or at 202-512-1800 from the Washington, DC area. 1040 ez free Prev  Up  Next   Home   More Online Publications
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This federal law, which dates back to 1972, was intended to protect consumers in their homes during door-to-door sales pitches or at sales in temporary business locations. According to the FTC, the 3-Day Cooling Off Rule does NOT apply to the purchase of new automobiles or items sold online. It only applies when a company is selling something that costs $25 or more at a location other than its regular place of business.

To comply with the 3-Day Cooling Off Rule, a seller must inform a buyer of his/her right to cancel the sale and receive a full refund within three business days.

Be aware that there are situations in which the Cooling-Off Rule does not apply:

  • You made the purchase entirely by mail or telephone.
  • The sale was the result of prior contact you had at the seller's permanent business location.
  • You signed a document waiving your right to cancel.
  • Your purchase is not primarily for personal, family or household use. .
  • You were buying real estate, insurance, securities, or a motor vehicle.
  • You can't return the item in a condition similar to how it was when you got it.
  • You bought arts or crafts at a fair, shopping mall, civic center, or school.

Remember, if you paid by credit card and are having difficulty getting your refund, you may also be able to dispute the charge with your credit card company under the Fair Credit Billing Act.

The 1040 Ez Free

1040 ez free Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. 1040 ez free For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. 1040 ez free If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. 1040 ez free Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. 1040 ez free A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. 1040 ez free Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. 1040 ez free Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). 1040 ez free It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. 1040 ez free A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. 1040 ez free Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. 1040 ez free It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. 1040 ez free Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. 1040 ez free Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. 1040 ez free Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. 1040 ez free Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. 1040 ez free Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. 1040 ez free Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. 1040 ez free Listed property placed in service before 1987. 1040 ez free   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. 1040 ez free Listed property placed in service after 1986. 1040 ez free   For information on listed property placed in service after 1986, see Publication 946. 1040 ez free Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. 1040 ez free You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. 1040 ez free The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. 1040 ez free However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. 1040 ez free Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. 1040 ez free Example. 1040 ez free Sarah Bradley uses a home computer 50% of the time to manage her investments. 1040 ez free She also uses the computer 40% of the time in her part-time consumer research business. 1040 ez free Sarah's home computer is listed property because it is not used at a regular business establishment. 1040 ez free Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. 1040 ez free Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. 1040 ez free Her combined rate of business/investment use for determining her depreciation deduction is 90%. 1040 ez free Qualified Business Use A qualified business use is any use in your trade or business. 1040 ez free However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. 1040 ez free See Employees, later. 1040 ez free 5% owner. 1040 ez free   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. 1040 ez free   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. 1040 ez free Related person. 1040 ez free   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. 1040 ez free Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. 1040 ez free See Publication 463. 1040 ez free Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. 1040 ez free Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. 1040 ez free Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. 1040 ez free Any payment to you for the use of the automobile is treated as a rent payment for 3). 1040 ez free Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. 1040 ez free Use for the employer's convenience. 1040 ez free   Whether the use of listed property is for the employer's convenience must be determined from all the facts. 1040 ez free The use is for the employer's convenience if it is for a substantial business reason of the employer. 1040 ez free The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. 1040 ez free Use required as a condition of employment. 1040 ez free   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. 1040 ez free The use of property must be required for the employee to perform duties properly. 1040 ez free The employer need not explicitly require the employee to use the property. 1040 ez free A mere statement by the employer that the use of the property is a condition of employment is not sufficient. 1040 ez free Example 1. 1040 ez free Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. 1040 ez free She owns and uses a motorcycle to deliver packages to downtown offices. 1040 ez free We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. 1040 ez free The company reimburses delivery persons for their costs. 1040 ez free Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. 1040 ez free Example 2. 1040 ez free Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. 1040 ez free He must travel to these sites on a regular basis. 1040 ez free Uplift does not furnish an automobile or explicitly require him to use his own automobile. 1040 ez free However, it reimburses him for any costs he incurs in traveling to the various sites. 1040 ez free The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. 1040 ez free Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. 1040 ez free You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. 1040 ez free For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. 1040 ez free For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. 1040 ez free Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. 1040 ez free First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. 1040 ez free Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. 1040 ez free It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. 1040 ez free Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. 1040 ez free Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. 1040 ez free See Recapture of excess depreciation, next. 1040 ez free Recapture of excess depreciation. 1040 ez free   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. 1040 ez free Any excess depreciation must also be added to the adjusted basis of your property. 1040 ez free Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. 1040 ez free This means you figure your depreciation using the percentages fromTable 16 or 17. 1040 ez free For information on investment credit recapture, see the instructions for Form 4255. 1040 ez free Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. 1040 ez free In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. 1040 ez free To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. 1040 ez free See Car Used 50% or Less for Business in Publication 917. 1040 ez free Leased Property The limitations on cost recovery deductions apply to the rental of listed property. 1040 ez free The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). 1040 ez free SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. 1040 ez free Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. 1040 ez free A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. 1040 ez free This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. 1040 ez free Occasional or incidental leasing activity is insufficient. 1040 ez free For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. 1040 ez free An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. 1040 ez free Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. 1040 ez free Inclusion amount for property leased before 1987. 1040 ez free   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. 1040 ez free You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. 1040 ez free   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. 1040 ez free For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. 1040 ez free You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. 1040 ez free Special rules. 1040 ez free   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. 1040 ez free The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. 1040 ez free   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. 1040 ez free Maximum inclusion amount. 1040 ez free   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. 1040 ez free What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. 1040 ez free How long to keep records. 1040 ez free   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). 1040 ez free Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. 1040 ez free It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. 1040 ez free However, your records should back up your receipts in an orderly manner. 1040 ez free Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. 1040 ez free Written documents of your expenditure or use are generally better evidence than oral statements alone. 1040 ez free A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. 1040 ez free A daily log is not required. 1040 ez free However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. 1040 ez free Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. 1040 ez free An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. 1040 ez free For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. 1040 ez free Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. 1040 ez free However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. 1040 ez free A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. 1040 ez free For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. 1040 ez free Business Use Supported An adequate record contains enough information on each element of every business or investment use. 1040 ez free The amount of detail required to support the use depends on the facts and circumstances. 1040 ez free For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. 1040 ez free Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. 1040 ez free Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. 1040 ez free However, repeated uses can be combined as a single item. 1040 ez free Each expenditure is recorded as a separate item and not combined with other expenditures. 1040 ez free If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. 1040 ez free If these expenses are combined, you do not need to support the business purpose of each expense. 1040 ez free Instead, you can divide the expenses based on the total business use of the listed property. 1040 ez free Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. 1040 ez free For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. 1040 ez free Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. 1040 ez free Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. 1040 ez free Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. 1040 ez free It must be kept elsewhere and made available as support to the district director on request. 1040 ez free Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. 1040 ez free If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. 1040 ez free If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. 1040 ez free If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. 1040 ez free Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. 1040 ez free Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. 1040 ez free Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. 1040 ez free If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. 1040 ez free Employees. 1040 ez free   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. 1040 ez free Employees claiming the standard mileage rate may be able to use Form 2106–EZ. 1040 ez free Employer who provides vehicles to employees. 1040 ez free   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. 1040 ez free   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. 1040 ez free Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. 1040 ez free   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. 1040 ez free See the instructions for Form 4562. 1040 ez free Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. 1040 ez free In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. 1040 ez free In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. 1040 ez free For more information about deductions after the recovery period for automobiles, see Publication 917. 1040 ez free Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. 1040 ez free Table 1. 1040 ez free 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. 1040 ez free Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications